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Dive Brief:

Input from states in the PJM and ISO-New England markets will be critical to winning approval at the Federal Energy Regulatory Commission for any plan to enhance the resilience of the nation's power sector, Commissioner Robert Powelson said Monday.

Powelson told the audience at a regulatory summit in Washington that any proposal "will not garner any support" at FERC without input from states in the two markets, which were at the center of a Department of Energy proposal to subsidize fuel-secure generators that FERC rejected last month.

Both grid operators have active efforts in place to reform resource compensation in their wholesale markets but have faced pushback from states and other market participants. The PJM Board could vote on its capacity repricing proposal as soon as Wednesday.

​Dive Insight:

In FERC's decision rejecting DOE's coal and nuclear subsidy plan, commissioners highlighted efforts in PJM and ISO-NE as they asked grid operators to report back on how to enhance grid resilience.

Both grid operators have active price reform dockets that aim to, in their words, better integrate state energy policies into their market constructs. But both have also faced criticism from stakeholders who worry they could boost payments to aging generators without delivering resilience benefits.

At an appearance at the winter meeting of the National Association of Regulatory Utility Commissioners (NARUC), Powelson made clear that state concerns will play into FERC's examination of any grid operator resilience proposals.

"If there is a [resilience] problem, then we will ask the RTOs to put forth a just and reasonable proposal and I willtell you unequivocally: it will not garner any support if I don’t hear from the [PJM] member states or the New England states on the proposal," Powelson said. "Just like we did with capacity performance, the states are active partners in this conversation and I think the states need to be heard."

Powelson's comments come less than two days before PJM's board of directors is set to take up its capacity repricing proposal. The grid operator last month said it would submit its two-part capacity auction plan to the board despite stronger support for other solutions among states. The FERC commissioner said he did not want to "pre-judge" the PJM plan, but urged the grid operator's board to take state input into account as well.

"What if a board member raises his hand or her and says 'What's our conversation with the states?'" Powelson said. "I hope they have an answer and I hope that question gets asked."

Coming so close to the PJM vote, market watchers could see Powelson's comments as a "shot across the bow" aimed at the grid operator's board. After his conference appearance, the former Pennsylvania regulator appeared comfortable with that message.

"Good," he responded with a laugh. "Everything I say they should take into account. [FERC is] their regulator."